BILL ANALYSIS Senate Appropriations Committee Fiscal Summary Senator Christine Kehoe, Chair 2058 (Block) Hearing Date: 8/12/2010 Amended: 6/21/2010 Consultant: Bob Franzoia Policy Vote: L&IR 4-1 _________________________________________________________________ ____ BILL SUMMARY: AB 2058 would establish the California Training Benefits (CTB) Program within the Employment Development Department (department) and revise eligibility requirements for unemployment compensation benefits to specify that a person who qualifies for such benefits, extended duration benefits, or federal-state extended benefits or any federally funded unemployment compensation benefits shall be deemed to automatically be eligible for the program during a period of training or retraining. This bill would require that a determination of eligibility for training or retraining be issued to a person if any of specified conditions apply. This bill would require that, if training or retraining is not authorized under provisions governing automatic eligibility for those benefits, a determination of potential eligibility for benefits be issued to the person if the department finds that specified criteria apply. Because this bill would make various changes to existing eligibility requirements for training and retraining benefits, which would result in additional amounts being payable from the Unemployment Fund for those benefits, this bill would make an appropriation. The bill would require the department to prepare a report and make specified information available online. _________________________________________________________________ ____ Fiscal Impact (in thousands) Major Provisions 2010-11 2011-12 2012-13 Fund Increase of training Up to $4,000* Up to $8,000Up to $8,000 Special** benefits eligibility EDD administration Unknown, likely significant administrative Special*** savings annually * Average cost for each additional 1,000 persons, who would otherwise not be eligible under current law, to continue receiving unemployment insurance benefits while engaging in a training or retraining program. At the average weekly benefit ($304), the maximum cost to the Unemployment Fund could be $7,904,000 (1,000 new applications x 26 weeks maximum x $304) annually. When a claimant completes training before the 26 week limit the benefits terminate. ** Unemployment Fund *** Unemployment Administration Fund _________________________________________________________________ ____ STAFF COMMENTS: SUSPENSE FILE. Unemployment insurance (UI) is a federal-state program that provides weekly payments to eligible persons who lose their jobs through no fault of their own. The UI program is financed by employers who pay unemployment taxes on the first $7,000 in wages paid Page 2 AB 2058 (Block) to each employee in a calendar year. The benefits range from $40 to $450 per week depending upon earnings during a 12 month base period. Under current law, a person must be approved for training before training benefits are paid from the Unemployment Fund, a continuously appropriated fund. Under this bill, a person would be eligible for additional UI benefits. The cost to the Unemployment Fund would be for those additional UI payments for training that would otherwise not be approved under current law. Under current law, a person has to apply to the department for a determination of eligibility for UI benefits while receiving training. Under this bill, a person may automatically be eligible for the UI benefits. The department notes several variables that make it difficult to estimate who might be eligible for these benefits and for how long. For example, this bill would provide eligibility for persons who select a training provider from the state Eligible Training Provider List. Many persons who are currently approved for CTB benefits authorized by the Workforce Investment Act (WIA) are in training with providers on that list. This bill would provide the same approval for persons who arrange their own training using that list, but do not go through the WIA. In 2009, there were over 3.8 million claims filed for UI benefits and a total of 2.5 million eligibility determinations conducted. Of those determinations, 64,209 (2.5 percent) were for the CTB program. The department found 20,366 persons eligible to participate in the CTB program or less than two-tenths of one percent of the total UI claims filed. While 43,843 persons were found ineligible to participate in the CTB program, many of these persons may have received UI benefits because their training did not prevent them from accepting full-time work and they continued to seek work. The number of persons whose training actually led to a denial of UI benefits is unknown, but most likely it is a relatively small number when compared to the total number of persons who filed a claim and received benefits. Furthermore, many persons who would be denied benefits may opt to drop training in order to retain benefits as their only financial safety net. This bill's impact to the UI program would likely be limited to a small sub-set of claimants that includes those who were denied CTB participation under current law and those who would not meet the UI program's requirements for being available for work and seeking work. It is this sub-set of claimants who were denied to participate in the CTB program and did not meet the other eligibility requirements that may benefit from this bill.